Thursday, January 21, 1999 Published at 14:03 GMTUK PoliticsPaddy kills New Labour 'project'Some Lib Dems will celebrate the end of the Lib Lab pactBy Political Correspondent Nick Assinder

Paddy Ashdown's shock decision to quit as Liberal Democrat leader may have hammered the last nail into the coffin of Tony Blair's much-vaunted New Labour "project".

Mr Ashdown's departure is being seen in Westminster as a hugely significant event with repercussions that will spread far beyond the limited circle of his own party.

By announcing his resignation six months before it will come into effect, he has given Lib Dem members plenty of time to reflect on whether they want to continue their fragile alliance with the Labour government.

Most believe the answer will be a resounding "no". And that will shatter the grand design plotted by Peter Mandelson and being pursued by Tony Blair.

The prime minister constantly refers to the New Labour "project", but seldom explains it.

In essence it is a plan to transform the nature of British politics and make the Tories unelectable.

Tory rump

The dream is to see the creation of a centre-left coalition embracing New Labour, the Liberal Democrats and even disaffected Tories.

The Conservative Party will become a rump, with no natural geographic or demographic constituency and, as a result, consigned to permanent opposition.

Many Labour and Lib Dem backbenchers saw through "the project" from day one and are deeply unhappy about it.

They don't believe the voters will be fooled and will naturally take against any attempt to manipulate the political landscape.

When the next "time for a change" mood sweeps the nation, as it did in 1997, it will not matter how the parties have lined up - the government will still be kicked out.

There are also serious concerns about what the alliance has actually achieved for the Lib Dems.

It is convincingly argued that whatever Mr Ashdown claims to have won from the government- PR for Euro elections, devolution, freedom of information, reform of the Lords and the possibility of changes to the voting in general elections - arch "moderniser" Tony Blair would have done them anyway.

Many rumours

Peter Mandelson: His downfall could have brought on Ashdown's resignation

But despite the deep unhappiness amongst MPs in both parties, it was all going swimmingly, until the demise of its architect Peter Mandelson.

There are any number of rumours sweeping Westminster about Mr Ashdown's surprise announcement.

Some claim he must have been caught out in another "Paddy Pantsdown" incident, others claim he has been offered a job by Tony Blair as a Euro Commissioner or a peace envoy for the Balkans.

Mr Ashdown insists he had taken the decision almost two years ago and had informed the prime minister then.

Many in his own party find that hard to swallow. He had led them to believe he would take them into the next election.

The most likely explanation is that, when Mr Mandelson fell, Mr Ashdown saw the way the wind was blowing and decided to go while he was on a high note and before the alliance with Labour crumbled around his ears.

Kill the deal

Without Mr Mandelson, the anti-alliance ministers led by John Prescott and Gordon Brown will seize the moment to kill off the deal.

There have been brave words from Mr Blair and Mr Ashdown that, whoever succeeds the Lib Dem leader, the alliance will continue. Virtually no one believes them.

Two of the front runners to succeed Mr Ashdown, Charles Kennedy and Simon Hughes, are fiercely anti-alliance.

Even Mr Ashdown's likely candidate, Nick Harvey, is less enthusiastic about it than his leader.

In any case, the final decision will be taken by the party members under a one-member-one-vote system. And they are deeply sceptical.

So the likely outcome is an anti-alliance leader who will abandon the close relationship with Labour and kill off "the project."

That result will dismay Mr Blair and will contribute to the post-Mandelson atmosphere which is seeing the revival of some "Old Labour" tendencies.